Welcome back. Last week we had a double whammy question about Scaling your business – and it’s really got me thinking so this September and October I think we are going to have a bit of a focus on this subject. Anyway last week we discussed reasons to scale your business. My reasons were as follows:
1 I wanted to increase value
2 I wanted to create a saleable asset
3 I wanted to stop the business being Kate-reliant
4 I wanted to achieve better buying rates through volume
5 I wanted to spread risk
But it’s not easy and I will now tell you the biggest personal challenges that I and others I know who have done so faced in scaling our businesses.
And now we are going to discuss the biggest challenge of SCALE.
Here are my top five:
1 No one will do your job as well as you can
The shift from a small business to a larger business will inevitable lead to a dilution of your personal message and service delivery. In its purest form it’s like when I first started my courier company 23 years ago. Once upon a time I hand delivered a parcel. I absolutely knew it got there because I picked it up from my client and drove it to its destination. But in my scale business we deliver thousands of parcels a day – so I can’t possibly deliver them all. So they won’t be delivered in quite the same way. And you have to deal with that.
2 The bigger you are the more arseholes you come across
This is quite possibly the worst bit about scaling my business. I lived in a bubble for the best part of twenty years thinking only a tiny minority of people are dodgy/liars/dishonest in business. In reality the bigger your business is – the more of humanity you are exposed to and there is a surprisingly high percentage of arseholes. The bigger you get the more you come across – and it’s a challenge – not an impossible one but a real challenge for a hippy like me to overcome – to toughen yourself up to deal with a plethora of them.
3 It takes a long time until it’s worth it
Here’s the reality of scaling your business – you can, very possibly (and I talk from experience) – grow your business ten fold before it starts to make you any money – if you decide to change its form – i.e. take on a team, offices, expand geographically – and I say this from very particular experience. The vast majority of businesses in the UK do not expand their turnovers to over £1m (which is typically a one site operation with the proprietor functioning as a working employee) because to be frank the leap from £1m to £10m (which is when the revenues will start to have an exponential effect in terms of personal impact) is too bloody hard.
I’ll tell you a few hard facts – I earned very little for four years taking my business from £1m to £10m – because we needed to minimise costs to reinvest in the expansion programme. So that period from £1m to £10m which has taken us three years or so is REALLY TOUGH. You have to keep the faith because the transformation of your business between the two states is really REALLY hard. And its not the first time I have tried to scale my business – my first attempt was in 1996 – but I didn’t have the finance, the wherewithall or the balls in the end to break through the cost level, the fear levels and the persistence level you really need to expand. So I dropped back to cottage industry. You have to be VERY determined to go through a period of undeniable hard work before it seems worthwhile. So be warned.
4 There is no nirvana in SCALE
I think people think SCALE provides a halcyon concept of a company whereby it all runs smoothly, cash is no longer an issue and you are earning a fortune. Well it isn’t. It’s still challenging – maybe in different ways – but trust me it’s still challenging.
So if you think if you scale to £10m everything will be different – you are right. It will be DIFFERENT – but no less STRESSFUL. Business is what it is – and your stresses will change – you’ll have a struggle making ends meet if you are still struggling for cash at £10m so best sort that challenge out early – but you will still have stresses.
5 Scale may be bad for business and for you
If you are your business and your clients love you and the personal rapport – then scale can absolutely fuck that up. I know of two particular companies that I deal with now – because I deal with them personally – and if they scale their business too much further I won’t keep using them. I particularly use them because they are small personalised providers. I’m already seeing little hints of commoditisation – which I hate – and it will stop me using them.
So you really have to think about scale and the whys and what the challenges you might face. It’s a great idea for some and possible a bad idea for others. So whatever you do have a big think, have a big plan and be careful before you head down the yellow brick road of SCALE.